The iPhone 17, which entered the UAE market a year ago at AED 3,399, now costs AED 3,799 on Apple’s website — an increase of AED 400 despite no changes to the phone’s specifications.

The price rise is part of a broader increase in electronics costs that first affected personal computers and has now reached the smartphone market.

The iPhone 17 is not the only example. The new iPhone 18 Pro and Pro Max are also more expensive than the previous generation. Samsung’s Galaxy Z Fold8 Ultra costs AED 400 more than its predecessor, the Z Fold7, while Google has raised prices across its entire Pixel 11 range.

Under normal circumstances, smartphone prices decline over time, and many buyers wait for a new generation to launch so they can purchase the previous model at a lower price. This year, however, that pattern has changed.

The main reason is the sharp rise in memory chip prices, a cost manufacturers can no longer fully absorb and are increasingly passing on to consumers.

How much have smartphone prices increased?

Apple’s price increases are particularly unusual because they also apply to phones already on the market.

When Apple unveiled the new iPhone 18 Pro models on September 9, it raised US prices for the iPhone 16, iPhone 17, iPhone Air and iPhone 17e by $100 each.

In the UAE, prices for the iPhone 17, iPhone Air and iPhone 17e have each increased by AED 400, even though none of the models has been redesigned or relaunched.

These phones would normally become cheaper at this point in the year, making the price increases more significant for buyers.

At other companies, higher prices have also been accompanied by changes to technical specifications. Google raised the price of the Pixel 11 Pro by $100 while reducing the base model’s RAM from 16GB to 12GB. The company attributed the decision to a severe RAM shortage in the supplier market.

Reports have also indicated that Samsung is considering raising the price of the Galaxy S26 in South Korea from October 1, although the company said no final decision had been made.

According to Counterpoint Research, prices of smartphones already on the market have risen this year by an average of about 15% globally and 18% in the Middle East and Africa.

New models are also launching at prices about 25% higher than the previous generation.

The research firm said more than 40% of the phones it examined had increased in price, an unprecedented situation.

Rising costs have been particularly noticeable in budget and mid-range phones because memory accounts for a larger share of their production costs.

What is driving smartphone price increases?

The main factor behind rising smartphone prices is the surge in memory chip costs.

Prices for DRAM and NAND memory have increased by more than 300% compared with last year, and IDC said smartphone manufacturers now have few options for absorbing the additional costs.

A year ago, RAM and storage accounted for about 10% of the production cost of an iPhone Pro. That share has risen to about one-third in the current quarter.

TrendForce forecasts that these components will account for more than 40% of production costs by mid-2027.

How AI is contributing to the memory chip shortage

One of the main reasons for rising RAM prices is a shift in chipmakers’ production priorities.

Memory manufacturers have allocated part of their production capacity to high-bandwidth memory, or HBM — a type of multilayered DRAM used alongside artificial intelligence accelerators in data centres.

Producing this type of memory is more profitable than making chips for smartphones.

HBM also requires more silicon for each unit of usable capacity. As a result, shifting factory capacity towards HBM production has further constrained supplies of conventional RAM at a time when demand for memory chips is exceptionally high.

In a June interview with The Wall Street Journal, then Apple chief executive Tim Cook compared conditions in the memory market to a “once-in-a-century flood”.

However, not everyone in the industry believes the price increases are solely the result of supply and demand.

In June, a group of consumers and small businesses in California filed a lawsuit against Samsung, SK Hynix and Micron.

Together, the three companies control about 90% of the DRAM market.

The plaintiffs alleged that the companies had used the AI boom as cover to keep supplies of conventional memory restricted.

The manufacturers denied allegations of collusion. Courts also dismissed a similar claim in 2022.

How long will high smartphone prices continue?

Assessments cited in the report suggest there is no sign of a rapid easing of pressure on the memory market, and chip shortages could continue for several years.

SK Hynix, one of the world’s three largest memory manufacturers, forecasts that supply conditions will be even more challenging in 2027 than in 2026, with demand continuing to exceed its production capacity beyond 2030.

Intel chief executive Lip-Bu Tan had also previously said market conditions were not expected to improve before 2028.

In theory, expanding factory capacity could help address the shortage, but doing so requires significant time and investment.

Building a new memory chip factory costs more than $15 billion, equivalent to about AED 55 billion, and takes at least 18 months to become operational.

Under announced plans, Micron’s new factory in Singapore will begin operations in 2027. Samsung’s Pyeongtaek factory expansion is scheduled for 2028, while SK Hynix’s facility in Indiana is expected to begin production in late 2028.

These investments mark a shift from 2024 and 2025, when spending on production capacity was limited. However, their impact is not expected to be felt quickly in the market.

Will smartphone prices fall again?

Lower memory chip prices will not necessarily make smartphones cheaper.

The experience of 2022 and 2023 shows that despite a sharp fall in memory prices, smartphone prices did not decline. The average global selling price was still rising two years later.

In other words, savings from lower component costs are rarely passed on in full through lower retail prices.

The budget segment is facing the greatest pressure.

According to a report by FDM CCS Insight, prices for some entry-level phones have increased by more than 50% compared with the same period last year.

IDC said the market for phones priced below $100, equivalent to about AED 370, is facing a serious threat to its survival. About 173 million phones in this price category were shipped in 2025.

Gartner also forecasts that buyers in this segment will leave the market at five times the rate of flagship smartphone buyers.

As a result, it remains uncertain whether ultra-low-cost phones will return to the market.

The report advises consumers not to rush to replace their current phones if they are still working well, as market conditions could become even more difficult next year.

Buyers who must purchase a new phone are also advised to choose the storage capacity they genuinely need rather than paying for additional capacity they may require in the future, as storage remains one of the few purchase costs they can still control.